UPDATE 1-Spain beats bond sale target, brushes off Cyprus crisis
* Spain sells 4.5 billion euros of debt at triple-bond sale
* Average yields lower on all three bonds
* Spain has sold more than 34 percent of 2013 bond issuance goal
By Paul Day
MADRID, March 21 (Reuters) - Spain sold more than planned at a bond auction on Thursday at yields slightly below those paid at sales over the last month, with investor appetite undimmed by the financial crisis in Cyprus.
The Treasury sold 4.5 billion euros ($5.8 billion) at the sale of three maturities, including the 10-year benchmark, beating the top end of its target range of 3 to 4 billion euros.
"It's a very good auction ... Contagion fears for the time being are not materialising and we believe this is going to continue," rate strategist at Commerzbank in London Michael Leister said.
Spain has now sold more than 34 percent of its total 2013 goal as it makes the most of renewed investor appetite in high-yielding debt, backed by the European Central Bank's pledge last summer to do whatever was necessary to protect the monetary union.
Cyprus has faced the prospect of bankruptcy since Tuesday, when its parliament voted unanimously against a levy on bank deposits and continues to search for a new plan to find billions of euros to qualify for European aid.
But Spain's dire economy, which is not expected to emerge from its more than a year-long recession until next year, massive unemployment and high deficit have become less of a worry for investors since the ECB plan to buy distressed members' bonds.
"(The sale has) gone very well. Clearly there is no Cyprus angst or Italy angst in that sale. They sold more than they were targeting," said Marc Ostwald, strategist at Monument Securities in London.
"It is basically people reaching for yield. You can't make any returns in Bunds, or in gilts or in Treasuries."
The risk premium investors demand to hold Spanish over German debt fell sharply after the auction, to around 347 basis points, a long way from euro-era highs last July of around 650 bps.
On Thursday, the Treasury sold 1.2 billion euros of a bond due March 31, 2015, at an average yield of 2.275 percent compared to 2.540 percent when it last sold Feb. 21. The bond was 4 times subscribed after 3.7 times in February.
The bond maturing Jan. 31, 2018 sold 1.0 billion euros, while yields fell to 3.557 percent from 3.572 percent just two weeks ago, with a bid-to-cover ratio of 3.6 compared to 2.3 previously.
The yield on the longer-dated, benchmark bond, due Jan. 31, 2023 was 4.898 percent compared to 4.917 percent at the beginning of March, with demand outstripping supply by 1.9 times compared to 2.3 times previously.